Correlation Between Sun Life and Codexis
Can any of the company-specific risk be diversified away by investing in both Sun Life and Codexis at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sun Life and Codexis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Life Financial and Codexis, you can compare the effects of market volatilities on Sun Life and Codexis and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sun Life with a short position of Codexis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Life and Codexis.
Diversification Opportunities for Sun Life and Codexis
Very poor diversification
The 3 months correlation between Sun and Codexis is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Sun Life Financial and Codexis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codexis and Sun Life is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sun Life Financial are associated (or correlated) with Codexis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codexis has no effect on the direction of Sun Life i.e., Sun Life and Codexis go up and down completely randomly.
Pair Corralation between Sun Life and Codexis
Considering the 90-day investment horizon Sun Life is expected to generate 1.38 times less return on investment than Codexis. But when comparing it to its historical volatility, Sun Life Financial is 5.2 times less risky than Codexis. It trades about 0.07 of its potential returns per unit of risk. Codexis is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 552.00 in Codexis on September 3, 2024 and sell it today you would lose (94.00) from holding Codexis or give up 17.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Life Financial vs. Codexis
Performance |
| Timeline |
| Sun Life Financial |
| Codexis |
Sun Life and Codexis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Life and Codexis
The main advantage of trading using opposite Sun Life and Codexis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Life position performs unexpectedly, Codexis can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Codexis will offset losses from the drop in Codexis' long position.| Sun Life vs. Axa Equitable Holdings | Sun Life vs. American International Group | Sun Life vs. Arch Capital Group | Sun Life vs. Old Republic International |
| Codexis vs. Nuvation Bio | Codexis vs. Lyell Immunopharma | Codexis vs. Century Therapeutics | Codexis vs. Generation Bio Co |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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